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April 03, 2012

Drying up of mega deals drives PE investments to below $2-B in Q1’12

Secondary transactions rise as global PE firms buy out stakes of earlier investors

Private Equity firms invested about $1,886 million across 90 deals during the quarter ended March 2012, according to a study by Venture Intelligence . The investment amount was almost half that was invested in the same period last year ($3,614 million across 107 transactions). The immediate previous quarter had witnessed $1,470 million being invested across 120 transactions. There were six reported PE investments worth over $100 million (and none above $200 million) during Q1’12 compared to 9 such transactions in the same period last year (which included 5 transactions over $200 million).

Three of the $100 million+ investments in Q1’12 went into the hospitals & clinics sector: $110 million into Care Hospitals (by Advent International) and $100 million each into DM Healthcare and Vasan Healthcare (by Olympus Capital and by the Singapore Government-owned GIC respectively) reinforcing the year-end Venture Intelligence survey in which PE investors highlighted healthcare as the most attractive sector for investments in 2012. Another Singapore government owned PE investor, Temasek, invested $137 million in publicly listed FMCG firm Godrej Consumer Products.

Overall, the Healthcare & Life Sciences industry attracted $581 million (31% of the value pie) across 14 investments (16% of the investment volume) during the period. It was followed by IT & ITES companies with $308 million across 35 reported investments and BFSI firms with $280 million across 11 investments.

The trend of the larger PE firms buying out the stakes of earlier PE/VC investors in Indian companies gathered momentum during the latest quarter. Examples of such transactions during the period included the GIC-Vasan deal (which saw a part exit for Sequoia Capital India); the $104 million investment by General Atlantic in Fourcee Infrastructure (complete exit for Mayfield) and the $50 million investment by Warburg Pincus (part exit for Motilal Oswal PE). Even new VC investors like the Patni family sponsored Nirvana Ventures, at the time of its investment in mobile gaming firm Games2win, chose to provide a similar exit via secondary sale to early investors (Nexus Ventures and ICICI Venture).

Real Estate

Private Equity-Real Estate firms made 12 investments (amounting to US$477 million across 10 deals with disclosed values) during the quarter ended March 2012. The pace of investments during the quarter was less than half that during the same period last year which witnessed 28 investments (with $1,523 million being invested across 26 deals with disclosed values) and also lower compared to the immediate previous quarter which witnessed 18 deals (with $641 million being invested across 13 deals). In fact, PERE investment volumes have decelerated for the fourth consecutive quarter in Q1’12.

The largest PERE investment announced during Q1’12 - and the only deal over $25 million reported during the period - was GIC’s $100 million investment in a Godrej Properties office project in Mumbai's Bandra Kurla Complex.

More detailed analysis of the Q1'12 numbers will be released in the upcoming Venture Intelligence India Roundup Q1'12 report.

The latest deal by deal information can also be looked up on the Venture Intelligence PE Deal database

About Venture Intelligence

Venture Intelligence, a division of TSJ Media Pvt. Ltd., is the leading source of information on private equity and M&A transactions in India. For more information, please visit